I have paid a five thousand pound deposit fior a commercial garage. I want it back. Legal position??? Thanks?

Question

I want to pull out of the purchase because the current owner has failed to provide proper accounts. He now refuses to return my deposit. What are my chances in county court?

Answer 1

I'd check the paperwork that you signed, assuming there is some. If I was a lawyer I'd certainly ask you why you handed over £5k when you hadn't seen the accounts. I wouldn't fancy your chances in Court, unfortunately this could be an expensive lesson.

Answer 2

It would be dependent on how the land was to be held. In English there are 2 legal estates:

1. The fee simple absolute ("freehold")
2. The term of years absolute ("leasehold")

The above were created under the Law of Property Act 1925 to simplify the holding of land.

Did you purchse the freehold or was the intention to create a lease? Why does this matter?

Under the LAW OF PROPERTY ACT (MISCELLANEOUS PROVISIONS) ACT 1989 s2 states:

1. The contract must be in writing;

2. The contract must be signed by both parties;

3. Unless there is an agreement in writing signed by both parties there is no contract - it is said to be void "Ab initio"

Although a contract is not signed it may be prevented from being undone by the doctrine of "estoppel" but this is a unclear area of law in many respects.

If the land was to be held as a "term of years absolute" (lease) then it would still need to be in writing UNLESS it is a lease of 3 years duration or less - these can be created verbally as in any other contract (provided for in s2(5) Law of Property Act (Miscelleneous provisions) Act 1989.

To summarise:

If a freehold the contract is unenforceable - you can walk away without penalty unless you signed. You should demand your money back. If this is not forthcoming you may sue for its return under the law of tort. It would be wrong to say you may sue for breach of contract because no contract exists if you have not signed!

If a lease the situation is different:

If for a term of 3 years or more and you did NOT sign then no disposition of land has taken place. You can get your money back.

If a term of less than 3 years if you created the contract orally or by some kind of conduct then you are bound by its terms and conditions.

Further considerations arise which should be noted. I append as follows:

When the current owner has failed to produce "proper accounts" do you mean you were induced into purchasing the land via fraud or some other kind of misreprentation?

Mispresentation is govered by the Mispresentation Act 1967. It must:

1. Induce the contract
2. Be a statement of fact and NOT one of opinion
3. Be made before or at the time the contract is made

If you would have bought the land irrepective of statements made then Mispresentation is of no vail - it must have an operative effect on the mind of contractee

Answer 3

Presumably you had a contract for the purchase drawn up and presumably you had this checked by your lawyer, and presumably there was a clause in it which said that your deposit was conditional upon audited accounts being handed over before completion because obviously no one would buy a business if they did not have concrete evidence that it was a viable concern.
If this were not done, then I am sorry, you did not safeguard your position and probably woyld not do well in the business world. However, what you need to do is speak to a lawyer now to see what steps you can possibly take.
Lastly of course, who did you give the deposit to? If it were not to a lawyer and held in their client account, then I'm sorry, you really are not cut out to be a garage owner.

Answer 4

The chances of recovering the money in court are very good but would begin proceedings now claiming the return of your deposit plus interest and your costs.

Answer 5

Was the money handed over as a non-returnable bond? Do you have a contract? Was the deposit subject to any conditions (evidence of trading)?

If not, sorry. Looks like it's gone.